Polish Minister: Roam-Like-at-Home Will Hurt Telecom Market

According to Anna Strezynska, Poland’s Minister of Digitization, implementing the roam-like-at-home regulation, in keeping with European Commission regulations taking effect this month, will bring difficulties in Poland. The large proportion of plans that include discount prices and generous service allotments will cause mobile operators to lose money, Strezynska said in a media interview.
 
Referring to Orange Poland, which has already implemented the roam-like-at-home principle consistently, she suggested that the operator, being part of a large international telecommunications group, has the option of cross-subsidizing roaming services. However, its competitors, P4 and Polkomtel, as well as at least two networks operating only on the national market, have no such capability
 
Strezynska also said that a relatively small group of users in Poland benefits from roaming services, while the majority will end up subsidizing these services in order to meet the European Commission’s requirements. This cannot be allowed, said Strezynska and continued: “For many years, we have been fighting for low prices in Poland,” she said, adding that she will be having talks with the European Commission to seek a solution to the roaming issue.
 
The long-heralded end to roaming surcharges in the EU, which is set to begin this month, clearly will be experienced differently in different member states. Widely touted by EC officials as an unmitigated boon to consumers, roam-like-at-home will definitely not be a gift to operators, and the impacts will obviously differ depending on the nature of the national market in question.
 
A report from Ernst & Young Poland has presented the findings on the effects that implementing the roam-like-at-home principle would have in the country. The firm estimates that the disparity between roaming and domestic rates will cost the average Polish operator around PLN 180 million (US $21.5 million) in revenues through limited consumption and around PLN 55 million (US $14.8 million) in EBITDA because of higher costs. According to EC data, the differences in wholesale rates, combined with the roaming use profile of the typical Polish subscriber, mean that Polish mobile networks will record losses from roam-like-at-home.
 
Despite all this, the time for arguing and negotiating with the EC is likely over. Polish operators—as well as operators in other markets, no doubt—will simply need to come up with creative pricing strategies to offset these losses. 

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. 

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Hutchison Whampoa Faces Uphill Battle in O2 Deal

After talks that began in January, Hutchison Whampoa on Tuesday announced its agreement to acquire U.K. operator O2, which is owned by Spain-based Telefónica for a total of £10.25 billion (US $15.2 billion). However, significant challenges from European Commission regulators lie ahead for the two companies. One key concern for competition authorities, of course, is the fact that a merger of Hutchison’s 3 UK with O2 would reduce the number of mobile network operators in the U.K. from four to three. Beyond that, the EC will have to consider whether the deal should be scrutinized only within the context of the U.K. market or within that of the EU market as a whole.

Any deal involving a reduction in competition in a given market is likely to face regulatory hurdles; this one is likely to face even higher ones than usual, or at least greater uncertainty. The question of jurisdiction is one reason. Since both Hutchison and Telefónica are multinational companies with operations in many European countries, major changes to their U.K. businesses will have ripple effects elsewhere, as well. The change in the composition of the EC within the past year is another “wild card” in assessing the deal’s chances. While similar mergers in Germany and Ireland were approved in 2014, the makeup of the Commission has changed since then. Additionally, those deals were green-lighted on condition that the operators in question open up spectrum for more MVNOs—a policy that would not constitute a remedy in the case of the U.K. market, in which there are already many MVNOs. And finally, the merger will have to be considered in light of another proposed merger in the U.K. announced within the last few weeks—BT’s agreement to purchase EE from Deutsche Telekom and Orange for £12.5 billion (US $18.6 billion). Unlike the 3–O2 deal, this one would not reduce the number of MNOs in the U.K., since it involves a fixed and broadband provider acquiring a mobile business to create converged services.

The above item appeared in recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues or to speak with the research team: http://www.tarifica.com/contactus.aspx